Teacher Pensions Blog

Are state pension plans a recruitment or retention incentive for teachers? It's complicated, but many of the claims about the value of pensions don't stand up to scrutiny:

Pensions could theoretically have some sort of blanket effect boosting recruitment and retention across the entire teaching profession. That argument may sound reasonable, but it's just as plausible that teachers don't know about or fully appreciate the thousands of dollars states and districts spend toward their pension each year. Most teachers will likely never see that money anyway.

For early- and mid-career teachers, state plans themselves assume that actually qualifying for a pension has no effect on teacher retention. In our review of state turnover assumptions, we found no state where teachers time their departures based on when they qualify for a minimum pension. If pensions were really a retention incentive for these workers, we'd see evidence of teachers hanging on just long enough to qualify for a pension. We don't.

Pensions do offer a retention incentive to late-career teachers. Teachers nearing retirement age do seem to respond to pension incentives, but this is a relatively small group of workers, and even large incentives barely change their behavior. For example, St. Louis spent $166 million on a pension enhancement that was worth tens of thousands of dollars for any teacher who stayed additional years. But other than teachers one year away from retirement, no other group of teachers changed their behavior, and the money had no effect on teacher retention.

It's impossible for state pension plans to act as a recruitment or retention incentive for individual public schools or districts within a state. State pension plans offer all teachers a benefit that's distinct from all other workers. But by definition, a statewide pension plan that includes all public schools and all public school districts cannot provide any special recruitment or retention effect amongst those same schools and districts. School District A can't distinguish itself from District B if it's offering the same thing.

To sum up, the research on teacher pensions has been unable to find a recruitment effect, and prospective teachers rarely consider pensions as one of their top reasons for entering the profession. Researchers have found some retention effects for the small fraction of teachers who are committed to teach in one place for an entire career, but the teachers responding to this financial incentive may prefer to be doing something else instead. Two studies, one looking at macro-level impacts in Illinois and another looking at individual retirement decisions in Missouri, suggest that pensions may encourage some late-career teachers to continue teaching even if they're burned out or ready to do something else. In both studies, the pension plan appears to be slightly boosting late-career teacher retention, but it doesn't seem to benefit students.

At best, pension plans may provide a small boost in the retention of very late-career veteran teachers, but they have not led to increases in student achievement.